Why Your Business Shouldn't Be All About You
This isn't a post about how you should look after your employees or the advantages of charitable acts as a business — though both those things are worth considering as a business owner. Instead, this post is about how your business is put at risk if it's too dependent on you. It's nice to know you're needed, but if your business can't stand alone, it might not stand at all — and the value of the company could be impacted when it comes time to sell it.
One person can't keep a growing business successful
A first lesson many small business owners learn is that they can't do everything themselves. Even at the start, when you might not need any staff, success often requires reaching out for assistance from other professionals. Many small-business owners work with someone to acquire then develop the business or hire legal and accounting professionals to cover more technical details.
As your business grows and you bring on staff, though, it makes sense to start delegating to those individuals. If employees can't get daily tasks done without checking in constantly or getting your approval on every decision, why are you paying them? It might seem like you're protecting your interests, but you're actually creating more risk by not putting staff in positions where they learn, grow and make a contribution of real value. One person is only able to make so many decisions a day, so if your staff don't grow, your business doesn't. Shouldering all the responsibility is also a heavy load that creates pressure, increasing the chance that you could make a major mistake that negatively impacts your company.
What happens when you need a break?
Even if you're super-efficient and able to take on extreme burdens, if the business depends 100 per cent on you, you never get a break. The majority of small-business owners want a holiday from time to time. That means hiring the right people so you can take time off while your business continues to prosper.
Even if you don't think you'll ever want a break from your company, life can intervene. What if you have a family emergency? What if you fall ill or are in an accident? At a time in your life when you might need the business to run smoothly so you can deal with disruption, you can't afford the confusion and hassle that arises if the company depends solely on you.
How dependence on you could impact business value
Finally, a business that doesn't function apart from you has reduced value to anyone else. If revenue depends primarily on your personal connection with clients or no one else can figure out the day-to-day processes, your chances of achieving an optimal sales price are reduced. Even if someone does decide to buy the business, they are likely to negotiate for a lower price based on the hassle of reworking processes, finding new clients or training staff that have never been fully integrated into the company. Most significantly, they are going to consider the cost of employing someone to do what you’ve been doing. And they’re going to deduct that salary cost from the bottom line on which you’ve based your business valuation.
If you can't leave for a few days without risking the viability of your company, the business is too dependent on you. Consider working with employees or outside consultants to make changes that ensure company viability even if you have to give up the helm. Think about how your role as owner can become one of governance rather than operational management. Then taking over your role is more attractive to a new owner and does not require an additional salary for your replacement.
If you would like to know more about selling your business, or preparing for maximum sales value you can learn more here:
https://go.linkbusiness.co.nz/sellmybusiness/